Wednesday, February 13, 2008

how poor are America's poor?

From Robert Rector's most recent report on the Census Bureau data...

I first saw this research in the early 1990s-- when concern about poverty had grown and concern about homelessness had peaked. The results today are similar-- provocative if you haven't seen them, but not all that surprising when one realizes the extent to which the poverty rate is flawed as a statistic charged with measuring poverty.

The poverty rate is the proportion of people who live in households whose "reported earned income in a given year" is less than the relevant poverty line (adjusted for family size and inflation).

As such, there are four problems with the statistic:

1.) "reported"-- unreported income will not be reflected by the poverty rate

2.) "earned"-- the poverty rate does not include non-cash redistribution to the poor, so it is better a measure of dependence on government rather than a measure of standards of living

3.) "income"-- the poverty line says nothing about wealth or expenses, so significant wealth (e.g., the elderly owning their own home but having little income) or huge expenses (e.g., from health care) will not be reflected

4.) "in a given year"-- the poverty rate is only a snapshot; instead, we'd like to know how well the poor will do in a few years (e.g., some of my buddies in grad school were "poor" for a few years)

This isn't to say that we have no poverty-- or that poverty is not a problem (hey, I've written a book and a half about it!)-- just that the primary statistic in this arena is highly flawed. And the flaws also explain the seemingly aberrant findings in Rector's report.

Here's the "Executive Summary" from Rector's report...

Each year, the U.S. Census Bureau counts the number of "poor" persons in the U.S. In 2005, the Bureau found 37 million "poor" Americans. Presi­dential candidate John Edwards claims that these 37 million Americans currently "struggle with incredible poverty."[1] Edwards asserts that America's poor, who number "one in eight of us…do not have enough money for the food, shelter, and clothing they need," and are forced to live in "terrible" cir­cumstances.[2] However, an examination of the living standards of the 37 million persons, whom the government defines as "poor," reveals that what Edwards calls "the plague"[3] of American poverty might not be as "terrible" or "incredible" as candi­date Edwards contends.

But, if poverty means (as Edwards asserts) a lack of nutritious food, adequate warm housing, and clothing for a family, then very few of the 37 million people identified as living "in poverty" by the Cen­sus Bureau would, in fact, be characterized as poor. Clearly, material hardship does exist in the United States, but it is quite restricted in scope and severity.

The average "poor" person, as defined by the government, has a living standard far higher than the public imagines. The following are facts about persons defined as "poor" by the Census Bureau, taken from various government reports:

  • Forty-three percent of all poor households actu­ally own their own homes. The average home owned by persons classified as poor by the Cen­sus Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.

  • Eighty percent of poor households have air conditioning. By contrast, in 1970, only 36 percent of the entire U.S. population enjoyed air conditioning.

  • Only 6 percent of poor households are over­crowded; two-thirds have more than two rooms per person.

  • The typical poor American has more living space than the average individual living in Paris, Lon­don, Vienna, Athens, and other cities throughout Europe. (These comparisons are to the averagecitizens in foreign countries, not to those classi­fied as poor.)

  • Nearly three-quarters of poor households own a car; 31 percent own two or more cars.

  • Ninety-seven percent of poor households have a color television; over half own two or more color televisions.

  • Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception.

  • Eighty-nine percent own microwave ovens, more than half have a stereo, and a more than a third have an automatic dishwasher.

Overall, the typical American defined as poor by the government has a car, air conditioning, a refrig­erator, a stove, a clothes washer and dryer, and a microwave. He has two color televisions, cable or satellite TV reception, a VCR or DVD player, and a stereo. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry, and he had suf­ficient funds in the past year to meet his family's essential needs. While this individual's life is not opulent, it is equally far from the popular images of dire poverty conveyed by the press, liberal activists, and politicians.

Of course, the living conditions of the average poor American should not be taken as representing all of the nation's poor: There is a wide range of liv­ing conditions among the poor. A third of "poor" households have both cell and landline telephones. A third also have telephone answering machines. At the other extreme, approximately one-tenth of fam­ilies in poverty have no telephone at all. Similarly, while the majority of poor households do not expe­rience significant material problems, roughly a third do experience at least one problem such as over­crowding, temporary hunger, or difficulty getting medical care.

Much poverty that does exist in the United States can be reduced, particularly among children. There are two main reasons that American children are poor: Their parents don't work much, and their fathers are absent from the home.

In both good and bad economic environments, the typical American poor family with children is supported by only 800 hours of work during a year—the equivalent of 16 hours of work per week. If work in each family were raised to 2,000 hours per year—the equivalent of one adult working 40 hours per week throughout the year—nearly 75 percent of poor children would be lifted out of offi­cial poverty.

As noted above, father absence is another major cause of child poverty. Nearly two-thirds of poor children reside in single-parent homes; each year, an additional 1.5 million children are born out of wedlock. If poor mothers married the fathers of their children, nearly three-quarters of the nation's impoverished youth would immediately be lifted out of poverty.

Yet, although work and marriage are reliable lad­ders out of poverty, the welfare system perversely remains hostile to both. Major programs such as food stamps, public housing, and Medicaid con­tinue to reward idleness and penalize marriage. If welfare could be turned around to encourage work and marriage, the nation's remaining poverty could be reduced.

While renewed welfare reform can help to reduce poverty, such efforts will be partially offset by the poverty-boosting impact of the nation's immigration system. Each year, the U.S. imports, through both legal and illegal immigration, hun­dreds of thousands of additional poor persons from abroad. As a result, one-quarter of all poor persons in the U.S. are now first-generation immigrants or the minor children of those immigrants. Roughly one in ten of the persons counted among the poor by the Census Bureau is either an illegal immigrant or the minor child of an illegal. As long as the present steady flow of poverty-prone persons from foreign countries continues, efforts to reduce the total number of poor in the U.S. will be far more dif­ficult. A sound anti-poverty strategy must seek to increase work and marriage, reduce illegal immigra­tion, and increase the skill level of future legal immigrants.

Robert Rector is Senior Research Fellow in Domestic Policy Studies at The Heritage Foundation.

[1] John Edwards, Letter to President George W. Bush, July 19, 2007, at (August 21, 2007).

[2] John Edwards, "Conclusion: Ending Poverty in America," in John Edwards, Marion Crain, and Arne L. Kalleberg, eds., Ending Poverty in America: How to Restore the American Dream (New York: The New Press, 2007), pp. 256, 257.

[3] Ibid., p. 256.


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